In the medium run, an increase in government spending that causes an increase in the budget deficit
A) affects the level of output but not its composition.
B) affects both the level and composition of output.
C) will not affect the composition of output but will affect the price level.
D) is neutral.
E) none of the above
Question 2
In the short run, an increase in government spending that causes an increase in the budget deficit
A) affects the level of output but not its composition.
B) affects both the level and composition of output.
C) affects only the price level.
D) is neutral.
E) none of the above
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